Arthur investigates Bitcoin’s impact on the UK housing market
Bitcoin has been one of the most hyped and media exposed subjects in the technology field: an innovative digital currency developed by Satoshi Nakamoto in 2008 and introduced as open-source software in 2009. The total value of all Bitcoin in existence is now more than £112billion.
Transactions are made without middle men, so there are no transaction fees and no need to give your real name. All you need to do is set up a virtual wallet website like Blockchain to store, keep track and spend your digital money. You are also able to purchase Bitcoin through an online exchange or Bitcoin ATM.
Apart from its financial applications linked to financial services, the idea of Bitcoin has been relatively unexplored within traditional markets such as property.
The value of cryptocurrencies has risen dramatically over the past few years. In March 2017 the price of a Bitcoin exceeded the value of an ounce of gold for the first time (then around £940), so it is no surprise that in 2017 many progressive landlords and property developers around the world have begun to list their properties with the option to purchase using Bitcoin.
This trend shows no signs of abating as homeowners are offering discounts to investors who bid with cryptocurrencies.
In September 2017 Daniel Roy put his £1,65million townhouse in Peckham, South London, on the market for 500 Bitcoin. The following month a newbuild family home in Colchester, Essex, was marketed for 82,55 Bitcoin – equal to around £25,000 less than if paying in sterling.
In an unprecedented case for London, the seller of a £17million Notting Hill mansion is only accepting payments in Bitcoin for the sale. According to Lev Loginov, founder of the property investment firm London Wall which is selling the mansion, cryptocurrencies are going to be the future of property sales. Loginov stated that paying in Bitcoin offers a “quicker, easier and much more efficient way to process a transaction rather than using banks, which are putting in unnecessary over-regulation”.
The prospect of cryptocurrency purchases is appealing to many, however there are some risks involved. Although not illegal, Bitcoin is not considered legal tender in the UK, therefore it is not covered by UK regulatory protection.
As all cryptocurrency markets are highly volatile, experts advise not to invest money that one cannot afford to lose. As such, they recommend using cryptocurrencies for investing smaller amounts as opposed to storing large amounts or all of one’s funds.
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